KELLY FINNELL v. GLENN A. COHEN
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RENDERED: February 23, 2001; 2:00 p.m.
NOT TO BE PUBLISHED
C ommonwealth O f K entucky
C ourt O f A ppeals
NO.
1999-CA-002620-MR
KELLY FINNELL
APPELLANT
APPEAL FROM JEFFERSON CIRCUIT COURT
HONORABLE THOMAS B. WINE, JUDGE
ACTION NO. 97-CI-006753
v.
GLENN A. COHEN
APPELLEE
OPINION
AFFIRMING
** ** ** ** **
BEFORE:
HUDDLESTON, JOHNSON, AND SCHRODER, JUDGES.
SCHRODER, JUDGE:
This is an appeal from a default judgment
awarding compensatory and punitive damages in an action for
malicious prosecution arising out of two complaints filed by
appellant with the Kentucky Bar Association against appellee, his
former lawyer.
Appellant asserts numerous assignments of error.
After reviewing these arguments, the record herein and the
applicable law, we do not see that any reversible error was
committed.
Thus, we affirm.
In 1993, appellant, Kelly Finnell, Jonathon Geer, and
four other individuals were sued for insurance fraud and breach
of fiduciary duty in the Jefferson Circuit Court.
Appellee,
Glenn Cohen, who was a member of the law firm of Seiller &
Handmaker, LLP, represented Finnell and the other five defendants
in that action.
Prior to May 9, 1997, Geer had been responsible
for and had paid all of the attorney fees in the action.
On that
date, Geer informed Finnell and Cohen that he would no longer pay
the attorney fees incurred by all of the defendants.
According
to Cohen, Finnell specifically asked Cohen if he would continue
to represent the defendants in the action, to which Cohen agreed.
However, Cohen did not believe it was necessary to obtain a new
written fee agreement.
Cohen thereafter continued to represent the defendants
in the action for some months.
After a settlement was finally
reached in the matter, Seiller & Handmaker sent Finnell a final
bill for $3,800 for legal work performed after May 9, 1997.
After sending the bill, Cohen did not hear from Finnell until
Finnell called him and stated that he had no intention of paying
the bill since there was nothing in writing obligating him to do
so.
Given Finnell’s unwillingness to honor the fee, Cohen
advised Finnell that his firm would be forced to file suit to
adjudicate the fee dispute.
In response, Finnell stated that if
the firm filed suit to try and collect its fee, he would file
disciplinary charges with the Bar Association against Cohen
accusing him of various, unspecified ethical charges.
On November 21, 1997, Seiller & Handmaker filed a
collection action against Finnell and the other five defendants.
On December 2, 1997, Finnell sent Cohen a copy of a complaint he
had filed with the Kentucky Bar Association regarding Cohen.
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The
complaint alleged that Cohen should have discussed any new fee
arrangements with him prior to sending him a bill after May 9,
1997.
Finnell’s second claim was that Cohen had abused his power
as an attorney by bringing the collection action against him when
Finnell had asked that the matter be resolved through mediation.
In his cover letter to Cohen, Finnell stated that if the law firm
abandoned its collection action, he would withdraw his Bar
complaint.
If they did not abandon the action, he would file
additional charges against Cohen.
Finnell’s letter reads in
part:
This is just the beginning. I will file a
supplemental complaint in which I allege that
the acts enumerated in the original complaint
are part of a pattern of unethical behavior
on your part that includes breach of
attorney-client confidentiality. . . . I will
save you the embarrassment of pursuing this
original complaint and filing my supplemental
complaint if you will withdraw your lawsuit.
The Kentucky Bar Association responded to Finnell’s Bar
complaint in a letter of December 29, 1997 which stated that the
matter was not appropriate for disciplinary action in that it was
primarily a fee dispute.
The letter also stated that Finnell’s
complaint was being returned to him and that the same did not
require forwarding to Cohen.
On January 28, 1998, following the filing of the
aforementioned Bar complaint, Cohen petitioned for and was
granted leave to file an amended complaint against Finnell and
the other defendants, alleging malicious prosecution and abuse of
process, seeking compensatory and punitive damages.
On February
17, 1998, Finnell filed a second Bar complaint against Cohen
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repeating the same charges as in the first complaint, with the
addition of a claim that Cohen had breached his attorney/client
privilege.
Finnell alleged that this breach occurred when Cohen
mentioned the fee dispute at a dinner party in the presence of
Geer and other non-parties.
Upon receipt of the second Bar
complaint, the Kentucky Bar Association requested a response from
Cohen.
Ultimately, on April 28, 1998, the Bar Association also
dismissed this second complaint against Cohen.
Finnell filed an answer to the original collection
action.
However, Finnell never filed an answer to the amended
complaint of January 28, 1998.
A pre-trial conference on the
matter was scheduled for March 23, 1998 which Finnell did not
attend.
At the request of Finnell, the pre-trial hearing was
rescheduled for April 14, 1998.
motion for default judgment.
On April 1, 1998, Cohen filed a
Thereafter, Finnell informed the
trial court by letter that he would not be able to attend the
April 14 pre-trial hearing, but did not request a continuance of
the matter.
On April 16, 1998, the court entered an order
stating that the matter would be reset for a hearing on May 11,
1998, and that if Finnell failed to appear, default judgment
would be entered against him.
May 11 hearing.
Finnell failed to appear at the
Consequently, the court entered default judgment
against Finnell on May 12, 1998.
was then set for May 27, 1998.
A hearing to determine damages
At that hearing, counsel for
Finnell appeared and moved the court to continue the hearing, set
aside the default judgment, try the damages issue before a jury,
and to dismiss for lack of jurisdiction.
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All of these motions
were denied.
Prior to the hearing on damages, the original claim
for attorney fees was satisfied.
Finnell paid the fee in its
entirety with interest at judgment rate.
Thus, the only
remaining issue was damages on the malicious prosecution claim.
At the hearing on damages, Finnell was represented by
counsel.
Subsequently, on August 19, 1998, the court entered its
order awarding Seiller & Handmaker:
$20,000 “for economic loss
resulting from the time spent by the law firm and Cohen to review
the complaints as well as defend against same”; $25,000 “for
emotional distress, humiliation, and embarrassment suffered by
Cohen”; and $25,000 in punitive damages.
From the order denying
Finnell’s motion to alter, amend, or vacate the order of
August 19, Finnell now appeals.
Finnell first argues that the trial court should have
dismissed the action for lack of jurisdiction because the amount
in controversy was less than the $4,000 jurisdictional amount
which is required for circuit court jurisdiction.
KRS 24A.120.
Finnell maintains that since $3,800 was the only amount
specifically sought in appellant’s complaint, circuit court
jurisdiction was improper.
In reviewing the amended complaint,
we see that not only did appellee seek the $3,800 in attorney
fees, it also sought compensatory and punitive damages for the
malicious prosecution claim in an amount to be determined by the
trier of fact.
Indeed, appellee recovered far in excess of the
$4,000 required to establish circuit court jurisdiction.
Accordingly, this argument is without merit.
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Finnell next argues that the trial court erred in
entering a default judgment against him.
CR 55.01 provides in
pertinent part:
When a party against whom a judgment for
affirmative relief is sought has failed to
plead or otherwise defend as provided by
these rules, the party entitled to a judgment
by default shall apply to the court therefor.
. . . The motion for judgment against a
party for failure to appear shall be
accompanied by a certificate of the attorney
that no papers have been served on him by the
party in default.
The granting of default judgment is in most cases discretionary
with the trial court.
Harris v. Commonwealth, Ky. App., 688
S.W.2d 338 (1984), cert. denied, 474 U.S. 842, 106 S. Ct. 127, 88
L. Ed. 2d 104 (1985).
Finnell contends that since he filed an answer to the
original complaint, default judgment was improperly entered.
do not agree.
We
To this day, Finnell has not filed an answer to
the amended complaint for malicious prosecution.
Even after the
trial court gave Finnell numerous opportunities to defend his
position at pre-trial hearings, Finnell failed to do so.
Thus,
we cannot say that the trial court abused its discretion in
entering default judgment against Finnell.
Finnell also contends that if the court adjudged that
he failed to appear in the action, a certificate of the attorney
stating that no papers have been served on him by the defaulting
party was required to be filed under CR 55.01.
It is not
disputed that no such certificate was filed in this action.
The
word “appeared” in CR 55.01 means that a defendant has
voluntarily taken a step in the main action that shows or from
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which it may be inferred that he has the intention of making some
defense.
Smith v. Gadd, Ky., 280 S.W.2d 495 (1955).
Since
Finnell filed an answer to the original complaint and was in
communication with the trial court and appellant regarding his
inability to attend the various scheduled pre-trial hearings, we
believe that Finnell “appeared” in the action within the meaning
of CR 55.01.
Hence, no such certificate was required.
Finnell then claims that if he did make an appearance
in the action, he was entitled to a jury trial on the issue of
punitive damages.
CR 55.01 further states:
If, in order to enable the court to enter
judgment or to carry it into effect, it is
necessary to take an account or to determine
the amount of damages or to establish the
truth of any averment by evidence or to make
such investigation of any other matter, the
court, without a jury, shall conduct such
hearings or order such references as it deems
necessary and proper, unless a jury is
demanded by a party entitled thereto or is
mandatory by statute or constitution. A
party in default for failure to appear shall
be deemed to have waived his right of trial
by jury.
Although Finnell did make a demand for a jury trial on
damages, he did not file his motion for a jury trial until the
day of the hearing on damages, May 27, 1998, after the case had
already been called.
CR 38.02 provides in pertinent part:
Any party may demand a trial by jury of any
issue triable of right by a jury by serving
upon the other parties a demand therefor in
writing at any time after the commencement of
the action and not later than 10 days after
the service of the last pleading directed to
such issue.
The last pleading on the issue was the amended complaint filed on
January 28, 1998.
As Finnell’s motion was filed well outside the
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10-day period, we deem that Finnell waived any right he had to a
jury trial on damages.
Finnell next complains that the trial court erred in
entering the default judgment as to the second Bar complaint
filed by Finnell and in considering the second Bar complaint in
assessing damages.
Finnell points out that the second Bar
complaint was not filed with the Kentucky Bar Association until
after the appellee’s amended complaint was filed.
Finnell
maintains that if the second Bar complaint is to be considered in
appellee’s action, appellee’s action should have been further
amended to allege the facts pertaining to the second Bar
complaint.
We do not agree.
Appellee’s amended complaint
alleges, among other things, that:
11. After receipt of Seiller & Handmaker,
LLP’s invoice, Defendant Kelly Finnell
(“Finnell”) advised Cohen that Defendants did
not intend to pay Seiller & Handmaker, LLP’s
fee. Further, in an attempt to dissuade
Cohen from collecting the fee, Finnell
advised Cohen that if Seiller & Handmaker,
LLP attempted to seek payment of the fee, he
would embarrass Cohen by filing a complaint
against Cohen with the Kentucky Bar
Association (“Bar”) alleging unethical
conduct on the part of Cohen.
. . .
14. On December 2, 1997, Defendant Finnell
filed a complaint against Cohen with the
Kentucky Bar Association alleging unethical
conduct on the part of Cohen. Said complaint
was completely frivolous and without merit.
At that time, Finnell advised Cohen that if
Seiller & Handmaker, LLP withdrew its claim
for legal fees, he would withdraw said bar
complaint.
. . .
16. On December 15, 1997, Defendant Finnell
issued additional threats and advised Cohen
that he (Finnell) would take further action
against Cohen with the Kentucky Bar
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Association unless Seiller & Handmaker, LLP
withdrew its claim for legal fees.
From our view of appellee’s amended complaint, appellee
was alleging a pattern of willful behavior intended to intimidate
Cohen into forfeiting his fee.
Finnell’s second Bar complaint
was merely his carrying through with the threats in allegation
#16 of appellee’s amended complaint and was essentially part of
this pattern of behavior.
As we have already held, the court was
justified in entering default judgment on the facts alleged in
the amended complaint.
Likewise, we see no problem with the
court considering the second Bar complaint in its assessment of
damages.
We shall now address four of appellant’s arguments
which we deem waived by the entry of the default judgment against
Finnell.
Finnell argues that the trial court erred:
in failing
to consider the fact that he relied on advice of counsel in
filing the Bar complaints; in finding that Finnell’s actions
constituted malicious prosecution; in failing to consider the
issue of publication as to the malicious prosecution claim; and
in not considering public policy as it relates to the claim for
malicious prosecution.
In a default judgment, the defaulting party admits
those allegations necessary to obtain the particular relief
sought by the complaint.
Howard v. Fountain, Ky. App., 749
S.W.2d 690, 692 (1988).
By defaulting in the instant case,
Finnell admitted those allegations comprising the malicious
prosecution claim and has therefore waived any defenses to that
claim.
After the default judgment was entered, the only issues
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Finnell could contest were those related solely to damages and
not to the merits of the case.
Id.
at 693.
The four arguments
cited above relate to the merits of the malicious prosecution
claim and, thus, cannot be considered on appeal.
Finnell next argues that the trial court erred in
failing to make specific findings supported by the record on the
issues of compensatory and punitive damages.
As to punitive
damages and the portion of compensatory damages encompassing
emotional distress, humiliation, and embarrassment, the court
made detailed findings supporting appellee’s entitlement thereto
as we shall discuss further below.
As to the compensatory
damages encompassing the $20,000 awarded for “economic loss
resulting from the time spent by the law firm and Cohen to review
the complaints as well as defend against the same,” the court
found that:
Cohen and the law firm also incurred
considerable expenses and time in meeting the
complaints filed by Finnell. The Court is
concerned that there may have been an
inordinate amount of time spent by the law
firm members in meeting with each other and
reviewing the same documents.
The trial court made no finding as to how many hours were
reasonably spent on the case, nor any findings as to the firm’s
hourly rate.
However, contrary to Finnell’s assertion, the court
had before it an accounting of how many hours the four members of
Cohen’s law firm each spent defending the case and the hourly
rate for each attorney.
The total amount alleged to have been
spent on the case was $43,100, of which the court allowed only
$20,000.
Although it would have been preferable for the court to
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specify what of the $43,100 it was allowing, the court did find
that the firm spent a great deal of time on the case, finding, in
fact, that actually too much time had been spent on the matter.
Damages must be shown with reasonable certainty.
Commonwealth,
Dept. Of Highways v. Jent, Ky., 525 S.W.2d 121 (1975).
Since the
court had sufficient evidence before it to justify its award of
$20,000 in compensatory damages, we deem that the court’s
findings, even if they were not specific enough, constituted
harmless error.
Finnell also complains about findings made by the trial
court regarding the original $3,800 fee.
The court found that
Finnell “certainly could have demanded an accounting of
anticipated charges, hourly fees, etc.”
Further, the court found
that “an agreement was reached between Finnell and Cohen that
Finnell would pay his own attorney fees.”
As to the former
finding, Finnell maintains that it was not his responsibility to
demand an accounting.
As to the latter finding, Finnell argues
that said finding was not supported by the evidence.
Although
the court did make these findings in its order on damages, we do
not see that they are relevant to the issue of damages, since
Finnell admitted owing the $3,800 fee by his default judgment and
even paid the fee prior to the hearing on damages.
Accordingly,
these arguments are deemed waived.
Another assignment of error proffered by Finnell is
that the trial court erred in finding appellee was entitled to
punitive damages.
KRS 411.184(2) provides that “[a] plaintiff
shall recover punitive damages only upon proving, by clear and
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convincing evidence, that the defendant from whom such damages
are sought acted toward the plaintiff with oppression, fraud or
malice.”
Finnell contends that his filing of the Bar complaint
does not meet the requirement of oppressiveness because he filed
the complaint based upon his reasonable belief that an ethical
violation had been committed.
We again note that Finnell
admitted to the allegation of malicious prosecution which has as
one of its elements “malice in the institution of such
proceeding.”
Raine v. Drasin, Ky., 621 S.W.2d 895, 899 (1981).
It follows that when Finnell allowed the default judgment to be
entered against him on the claim of malicious prosecution, he set
himself up for an award of punitive damages to be awarded against
him as well.
The court made the following specific findings
supporting its award of punitive damages:
On December 2, 1997, Finnell sent a proposed
bar complaint against Cohen with a letter
demanding Cohen voluntarily dismiss the
action against him. The Court finds the sole
purpose of this letter and proposed bar
complaint was to intimidate and harass Cohen
and the law firm. Finnell followed the
letter with a telephone call on December 15,
1997, again seeking to persuade Cohen to
dismiss the lawsuit. Finnell testified he
anticipated Cohen would be embarrassed by the
bar action.
From our review of the evidence, the above findings were
supported by substantial evidence in the record and were thus not
clearly erroneous.
See Black Motor Co. v. Greene, Ky., 385
S.W.2d 954 (1964).
Hence, appellee’s entitlement to punitive
damages is upheld.
Finnell’s final argument is that the trial court erred
in awarding compensatory and punitive damages that were
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disproportionate to the appellee’s actual injury.
The test
before the trial court of the excessiveness of a verdict is
whether the award is so great as to strike the mind at first
blush as being the result of passion or prejudice or
disproportionate to the injuries suffered.
Cooper v. Fultz, Ky.,
812 S.W.2d 497 (1991); Commercial Carriers, Inc. v. Matracia,
Ky., 311 S.W.2d 565 (1958).
Brewer v. Hillard, Ky., 15 S.W.3d 1, 9 (2000) quotes
Morrow v. Stivers, Ky. App., 836 S.W.2d 424, 430 (1992) for the
proposition that the “first blush” rule is not the proper
appellate standard.
“Once the issue is squarely presented to the
trial judge, who heard and considered the evidence, neither we,
nor will the Court of Appeals substitute our judgment on
excessiveness for his unless clearly erroneous.”
S.W.2d at 431.
Morrow, 836
The trial court reconsidered the excessiveness of
damages in the motion to alter, amend or vacate the judgment
filed on August 31, 1998, and affirmed its earlier decision.
Having reviewed the record and testimony, we conclude the trial
court did not abuse its discretion in so finding.
For the reasons stated above, the judgment of the
Jefferson Circuit Court is affirmed.
ALL CONCUR.
BRIEF FOR APPELLANT:
BRIEF FOR APPELLEE
F. Larkin Fore
Virginia F. Birkhead
Richard M. Sullivan
Louisville, KY 40202
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